Prepare flexible budge and budget report for manufacturing overhead . (LO 3), AN
ID: 2747450 • Letter: P
Question
Prepare flexible budge and budget report for manufacturing overhead.
(LO 3), AN
Speier Company estimates that 240,000 direct labor hours will be worked during 2014 in the Assembly Department. On this basis, the following budgeted manufacturing overhead data are computed.
It is estimated that direct labor hours worked each month will range from 18,000 to 24,000 hours.During January, 20,000 direct labor hours were worked and the following overhead costs were incurred.
Instructions
Prepare a monthly flexible manufacturing overhead budget for each increment of 2,000 direct labor hours over the relevant range for the year ending December 31, 2014.
Prepare a manufacturing overhead budget report for January.
Comment on management's efficiency in controlling manufacturing overhead costs in January.
varible overhead costs fixed overhead costs indirect labor 72,000 supervision 75600 indirect materials 48,000 depreciation 30,000 repairs 36,000 insurance 12000 utilities 24000 rent 9600 lubricants 12,000 property taxes 6000 total 192,000 total 133200Explanation / Answer
Monthly Manufacturing Overhead Flexible Budget For the Year 2014 Activity level Direct labor hours 18,000 20,000 22,000 24,000 Variable costs Indirect labor (0.3$) $ 5,400 $ 6,000 $ 6,600 $ 7,200 Indirect materials ($0.20) 3,600 4,000 4,400 4,800 Repairs ($0.15) 2,700 3,000 3,300 3,600 Utilities ($0.10) 1,800 2,000 2,200 2,400 Lubricants($0.05) 900 1,000 1,100 1,200 Total variable cost ($0.80) 14,400 16,000 17,600 19,200 Fixed costs Supervision 6,300 6,300 6,300 6,300 Depreciation 2,500 2,500 2,500 2,500 Insurance 1,000 1,000 1,000 1,000 Rent 850 850 850 850 Property taxes 500 500 500 500 Total fixed costs 11,150 11,150 11,150 11,150 Total costs $ 25,550 $ 27,150 $ 28,750 $ 30,350